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APPROVAL OF THE 2017 STOCKTON TOURISM BUSINESS IMPROVEMENT DISTRICT BUDGET AND SERVICE PLAN AND THE 2016 ANNUAL REPORT
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RECOMMENDATION
It is recommended that the City Council adopt a resolution approving the 2017 Annual Service Plan, Operating Budget and Assessment, and the 2016 Annual Report for the Stockton Tourism Business Improvement District.
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Summary
The City of Stockton contracts with the Stockton Convention & Visitors Bureau (Visit Stockton) to manage assessed funds collected from the Stockton Tourism Business Improvement District (STBID) and provide services as described in the approved Management District Plan. The contract requires Visit Stockton to submit an Annual Service Plan for the upcoming year, as well as an Annual Report from the prior year. The 2017 Annual Service Plan consists of the proposed operating budget, assessment, and anticipated goals for this calendar year. The Council is also being asked to review and approve the 2016 Annual Report. The 2017 Annual Service Plan, the 2016 Annual Report, as well as the 2017 Budget for the Stockton Tourism Business Improvement District are attached as Exhibits 1, 2, and 3 to the Resolution, respectively.
DISCUSSION
Background
The STBID was formed and established in December 2010, with a five-year term. Prior to its expiration in 2015, it was renewed and extended for an additional ten years, currently set to expire on December 31, 2025. The STBID includes all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Stockton.
The formation of the STBID was made possible under the California Property and Business Improvement District Law of 1994 to act as a funding mechanism to promote tourism in Stockton. These businesses are annually assessed a 4% rate of gross revenue for short term stays that are less than 31 days. Tourism Business Improvement Districts (TBIDs) allow lodging and tourism-related business owners to use the assessed funds for marketing and tourism-related activities.
The City of Stockton contracts with the Stockton Convention & Visitors Bureau (Visit Stockton) to manage the funds and report annually on services and marketing activities. Its mission statement is to promote Stockton by increasing the awareness and enhancing the image of the diverse cultural, historical, and recreational assets of Stockton. The contract requires Visit Stockton to submit an Annual Service Plan and Annual Report to be approved by the City Council. The 2017 Annual Service Plan describes the proposed activities, goals, objectives, and budget for the coming year.
The STBID Management District Plan stipulates proportionate budget allocation as follows, per year:
• Sales and Marketing - 75% or greater
(Designed to increase occupancy rates)
• Administration and Operations - 20% or less
(Office Administrative/Operational Expenses)
• Contingency/Renewal - 5%
The Management District Plan allows for the proportionate budget allocation percentages to fluctuate based on the proposed objectives, but not to exceed 15% per category each year.
Present Situation
The Visit Stockton 2016 Annual Report summarizes the activities and services administered by Visit Stockton last year. A few of those accomplishments are listed below:
• Launched the new Stockton, Stocked Full of Flavor brand
• Redesigned visitor’ guide and mobile friendly website
• Grew the nationally recognized Certified Tourism Ambassador (CTA) program
• Hosted local events such as Stockton Restaurant Week and Arts Week
• Sponsored numerous sporting events, including the CCAA Basketball, Baseball and Softball Championships
The primary goal of Visit Stockton is to increase hotel occupancy; 2016 demonstrated a positive increase in the occupancy rate from 64.5% (2015) to 66.3% (2016). In addition, the following statistical trends from 2016 demonstrate a positive hotel market performance, benefitting in an overall increase in revenue:
• The average Hotel Occupancy for Stockton in 2016 was 66.3%, with an overall demand up 4.9% from the prior year
• The 2016 Average Daily Rate (ADR) for Stockton hotels was at $79.53, up from $75.31 in 2015
• Stockton has an average of 1,802 hotel rooms sold each night
• Stockton hotel revenue was up 11.8% and has passed pre-recession levels
These positive indicators result in increased revenue coming into the STBID annual budget, allowing additional marketing opportunities to expand the efforts of Visit Stockton.
The 2017 Annual Service Plan addresses the proposed budget for the year, as well as the enhanced goals, strategies and objectives of Visit Stockton for this year. A summary of the 2017 Annual Objectives and Strategies are outlined below:
Increase Hotel Demand and Visitor Volume in Stockton
• Continue to grow the sport and group markets
• Target key California markets that drive hotel business to Stockton
• Focus on group and visitor experience to differentiate Stockton from competition
• Increase room nights in the primarily leisure and transient properties
• Increase presence at targeted industry tradeshows
• Continue local engagement of hotels through meetings, social media, and tours
• Conduct meetings with a sports advisory group
Enhance the Stockton Visitor Experience
• Continue to grow the Stockton Tourism Ambassador Program
• Promote and distribute outreach materials throughout the community
• Promote the Downtown Stockton Visitors Center
Marketing and Public Relations
• Launch the new re-branding campaign
• Continue to create positive public relations campaigns that promote the assets of Stockton through multi-media engagement, social media, and collateral materials
Organizational
• Continue to work collaboratively with regional partners
• Broaden networking opportunities
• Continue communication methods for sharing information with partners
The anticipated budget for 2017 amounts to $1,423,790. This includes both 2017 anticipated STBID revenue ($1,390,000) and miscellaneous revenue ($33,790).
|
2017 Total Revenue |
|
TBID Assessment |
$1,390,000 |
|
Miscellaneous Revenue |
$33,790 |
|
Total |
$1,423,790 |
The majority of the expenditures in 2017 are allocated as follows:
• Sales and Marketing - Total expenditure $1,165,934 or 82%
• Administration and Operations - Total expenditure $188,356 or 13%
• Contingency/Renewal - Total expenditure $69,500 or 5%
The above percentages are consistent with the STBID Management District Plan that was adopted by the City Council on November 4, 2014. The 2017 Service Plan is consistent with the intent of the Tourism Business Improvement District Assessment.
The proposed Resolution summarizes the action items needed for approval.
FINANCIAL SUMMARY
The City will retain 3% of the collected STBID revenue amount (approx. $41,700) to offset the ongoing cost of processing and collecting the assessment. As specified in the management agreement between the City and the Stockton Convention and Visitors Bureau, dated November 12, 2014, a 30% administrative cost recovery will be paid to the City for penalties and interest due as a result of delinquent assessment payments by lodging businesses in accordance with the District Plan. There is no other direct financial impact to the City of Stockton with this action.